Thursday, May 17, 2012

Indian Railways and Air India

Recently the Union Railway minister in his annual Rail budget came up with marginal increase in ticket prices across all fares, including hikes in platform ticket. This was to shore up the Railways as a viable entity and increase operation efficiency. As expected reaction from the opposition (Including the party leader of the Union Railway Minister) were against the hike and protested it until a roll back was done. In the meanwhile, the rail minister lost his job. It was not a complete roll back. The high-end tickets like A/C coaches fare were left out from roll back. The low-end tickets were brought back to where it was, including the platform tickets. The mantra behind that was to leave out the aam aadmi (the common man). The leaders patted themselves on the back. They have rescued the common man.

The perception is the aam aadmi is happy and so called saviours of aam aadmin, the political leaders found some peace with great pride. It is an action to just oppose anything without a basic sense of reasoning.

But there are unintended consequences to this just emotional political posturing.

The actual increase of price was long due. As an institution that ferries people, Railways cannot afford with such a low price. Ticket prices are still at rock bottom compared to other means of transport. Railways is going deeper into debt and is not making money. Modernization plans are put on hold and safety of passengers is definitely not assured. In neighboring China, trains run in excess of 300 kilometers per hour., But in India the travel time has not come down in the past few decades. With this poor state of railways, even a marginal rise in price is not acceptable to politicians? Even though a majority of people think it is much needed and willing to pay more for better service.Unfortunately both are not going to happening now. Politicians have once again demonstrated they want the people of India to have a sub standard travel vehicle.

It does not hurt the rich people. They will find a means to get around the country in a better way. The masses have to cope up with sub standard, life threatening, uncomfortable, slow system of rail transport in the country. The people who voted these politicians deserved to be punished with these petty politics., some times it makes you think.

Now comes Air India. No one who is flying on that is Aam Aaadmi. But the government will still own it. because.. because... because... Sorry., I have no idea. Why would a government run an airline business? Government has no incentive to run an airport or an airline in the country. It is better done by private players rather than the government. It is impossible for a few government beurocrats to operate a airline. A lot of smart people have failed on that. The government beurocrat is no smarter. Now the government has allocated Rs. 30,000 crore to bail out Air India. You should be a fool to believe that money is going to bail out the airline. It is throwing good money after bad one. It cannot even be called Gambling. There is a possibility of getting back more in a casino. But here... you don't get anything back. It is a pure loss on investment. And it is being given to the same people who brought Air India to what it is now. Moreover the government of India doesn't have to run this business. Where are the aam aadmi helper politicians here? Just treat Air India as a rich people business and just let the government get out of it. Rs. 30,000 crore is lot of money in any scale. Even after 5 years, I am 100% sure Air India would still be a negative earning business. There can be a argument made, that other national carriers are successful, like the Singapore airlines, Malaysian airlines. The simple reason is this, they are not run by Indian governments. There is a system in place with proper oversight and more importantly a system that is well managed and works. Can we do it in India? We are not able to do it so far... there is no reason to believe we will be successful in future. Bottom line, the Indian Government does NOT NEED to own an airlines or airport for that matter. Airport and Airlines are used ONLY by the elite and there is no aam aadmi role in it. People who fly abroad are perfectly capable of funding their fares from their own savings. Who is the government trying to help ? It is just fooling the tax payer.

If the government of India does not take decisive action with a long term perspective in mind, more of people's money will be lost through Air India. Don't maintain airports. The AAI has been a failure. It is slow in implementing projects, there is lack of discipline and horribly behind its international peers. The best way forward to give the average Indian, a pleasant flying experience is to privatize the sector 100%. Let the market take over.

About Me

The author of this blog is an Indian Citizen and works on computers for a living. Areas of interests includes Indian Politics, International Affairs and Business economics and all issues related to common man.